UK MTD - Bridging Software via KG SAP add-on

Starting April 2019, when all relevant VAT data is in SAP is a precondition, the add-on is used every quarter as direct communication bridge between SAP and HMRC.

When the tax codes are the only relevant source data for the VAT reporting (no adjustments are needed), Excel or other tools are only used for the calculation of the consolidated numbers of the nine boxes of the VAT return. Under above conditions, an SAP add-on can be installed that maps in SAP all VAT relevant data for the VAT return and communicates VAT return output to the new HMRC portal.

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Sometimes direct communication between your ERP and a third party (HMRC) is not allowed because of internal IT policies. Those IT policies might qualify 'direct communication' an unacceptable 'hacking' risk. To comply with such IT policies a 'MacroExcel solution' in combination with 'Bridging software' might be the right fit.

The MacroExcel and our bridging software can either be used as a final or as a temporary solution and over time be replaced by an KG SAP add-on.

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To avoid future manual mistakes and manual intervention the current existing operational VAT return process at multinationals will be updated before April 1, 2019, with introducing our developed API enabled MacroExcel (tested at a multinational). The VAT accounting records will also be stored in the MacroExcel, and our clients will upload the numbers of the VAT return automatically in our bridging software that will communicate these nine boxes to HMRC without manual intervention.

The MacroExcel can be used as a follow up design for the SAP add-on. That development will start after April 2019 and will be finalized end 2019.

The MacroExcel will than become obsolete when our SAP add-on becomes operational (everything is then digitalized and available in SAP). That is how it currently works for SAF-T filings in Poland and Lithuania, and the functionality developed is for the most part similar to MTD UK.

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The above-phased approach from MacroExcel to SAP add-on is for the UK necessary as the VAT return process is an existing and operational VAT process that is going to be tax digitalized, and the current VAT return processes can differentiate company by company. Standardization in an SAP add-on before April 1, 2019, is therefore often considered not yet feasible from a change management perspective or even needed due to the soft landing period.


Take aways 

  • Set up a project charter that will take effect preferable during feasibility but ultimately during design
  • Write a business case and problem statement
  • Define scope of the project
  • Define objectives and goals of the project
  • Involve stakeholders and define priorities
  • Set measurable milestones
  • Ensure that the right sponsors provide buy-in.
  • Identify (project) risks and how to manage them
  • Jointly validate and refine the project plan and develop a roadmap to success
  • Hold regular meeting to track progress of the various work streams

We combine technical knowledge with industry understanding and knowhow of technologically advanced tools and methodologies available in the market or developed by ourselves.

  • Focus on tax processes that could be improved
    • Manual process: same data requests are made by different stakeholders
  • As Is assessment
  • Anticipate future changes and the data needed
    • What are tax trends?
    • What is happening locally and what should be considered across jurisdictions where you operate?
    • Anticipate new stakeholders and their data needs or requests (internal and external)
  • Define scope and actions for short, mid and long term
  • Write business case for change
  • Realize sponsorship for implementation
  • What tax data is requested and by whom?
  • What tax process can be improved and what can be automated?
    • CIT, VAT, tax data warehouse
  • What is the Return on Investment?
    • Hard saving: process improvement
    • Meeting (new) tax requirement
  • What systems are in use: SAP, Oracle, etc
    • By which entities?
  • How many end-use computing tools (e.g. excel spreadsheet) do we have?
  • How do we avoid an ad-hoc solution?
    • Understand the bigger picture
    • Real problem and not the symptom

Technology-related tax risk: understand and address the potential harms and benefits of (new) technology.

Ascertaining proper IT support for ensuring efficient, timely and reliable reporting.

VAT should be considered in every aspect of the process, from concept through completion and beyond. Managing by design — looking at any process or transaction from end to end and factoring in all the requirements and controls essential to designing and optimizing a compliant VAT process.

We speak the language of the business and IT and no translation is needed.